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Month: November 2022

Ronaldo v Manchester United FC – Employer and Employee Relationship

Posted on by fluroltd

Manchester United (‘Man Utd or the club’) player, Cristiano Ronaldo (‘Ronaldo or the player’), has been a fantastic player for Man Utd over the years and his transfer to the club was seen as the second coming for the club and fans. However, following his comments in his interview with Piers Morgan on Piers Morgan Uncensored, after taking legal advice, Man Utd have since announced that Ronaldo is to leave club with immediate effect.

Man Utd announced in an official statement that Ronaldo’s exit was “mutually agreed”. As a consequence, it is reported that Man Utd have saved around £15.5 million in salary by terminating Ronaldo’s employment contract early.

Nevertheless, Man Utd would have had to weigh up whether the club could bring or defend a claim for compensation before FIFA or an English court further down the track for the residual value of Ronaldo’s employment contract.

This article looks at the possible legal issues and considerations faced by both parties before a mutual agreement was finally reached.  

Standard Form Contract – Express Terms

The first port of call for the club and its legal advisors would, in all likelihood, be the employment contract between the parties. 

In this context (taking any other image rights/commercial contracts aside), Ronaldo would have signed a Premier League standard form employment contract (‘Standard Form Contract’). The express terms set out in the Standard Form Contract includes clause 3.2, which states:

“The Player agrees that he shall not:

…

3.2.5 – knowingly or recklessly do, write or say anything or omit to do anything which is likely to bring the Club or the game of football into disrepute, cause the Player or the Club to be in breach of the Rules or cause damage to the Club or its officers or employees or any match official”.

Clause 10 of the Standard Form Contract then deals with termination of employment by the club. Specifically, it states:

“10.1 The Club shall be entitled to terminate the employment of the Player by 14 days’ notice in writing to the Player if the Player:

               10.1.1    shall be guilty of Gross Misconduct;

               10.1.2    shall fail to heed any final written warning given under the provisions of Part1 of Schedule 1 hereto.”

Gross Misconduct is defined in the Standard Form Contract:

“Gross Misconduct” shall mean serious or persistent conduct behaviour activity or omission by the Player involving one or more of the following:

(a) theft or fraud;

(b) deliberate and serious damage to the Club’s property;

(c) use or possession of or trafficking in a Prohibited Substance;

(d) incapacity through alcohol affecting the Player’s performance as a player;

(e)breach of or failure to comply with of any of the terms of this contract,

or such other similar or equivalent serious or persistent conduct behaviour activity or omission by the Player which the Board reasonably considers to amount to gross misconduct;

Implied terms

The above sets out the written or ‘express’ terms of the Standard Form Contract.

To the extent Man Utd would not have been adequately protected by the express terms agreed with Ronaldo, it may also be able to rely on certain terms which are implied by law into an employment contract. A breach of an implied term may be enforced by an employer as if the term was included expressly in the contract.

Further, Man Utd could have been assisted by the implied duty of mutual trust and confidence, the duty (on Ronaldo) to be ready and willing to work and/or the duty to obey lawful and reasonable orders.

Contractual and Statutory Rights

In the circumstances, the club will have considered whether Ronaldo’s conduct amounted to misconduct.

A further or alternative route for the club would have been to consider whether his actions justified his dismissal for the potentially fair reason of ‘some other substantial reason’ or a breakdown in trust and confidence and reputational risk.

The employment contract would have been governed by and construed in accordance with English law and the parties submit to the non-exclusive jurisdiction of the English Courts.

FIFA – The Football Tribunal

In this context, FIFA’s Football Tribunal is also competent to hear “employment-related disputes between a club and a player of an international dimension”. In this case, we have an employment related matter between an English club and a Portuguese player.

Specifically, FIFA introduced provisions and principles of contract and employment law such that a contract may be terminated with just cause without penalty of any kind and, the principle that compensation should be paid whenever a contract is terminated without just cause.

Terminating a contract with just cause

Art. 14 of FIFA’s Regulations on the Status and Transfer of Players (‘RSTP’) states:

“A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause.”

However, it then goes on to state at art 14.2, that:

“Any abusive conduct of a party aiming at forcing the counterparty to terminate or change the terms of the contract shall entitle the counterparty (a player or a club) to terminate the contract with just cause”.

FIFA’s Regulations do not provide a defined list of “just causes”. It is impossible to capture all potential conduct that might be considered just cause for the premature and unilateral termination of a contract in these circumstances. In short though, a contract may only be terminated prior to the expiry of the agreed term where there is a valid reason to do so.

As far as FIFA is concerned, when assessing whether a valid reason existed for a unilateral contract termination, the following principles should be applied, while considering the specific circumstances of each individual matter:

  • Only a sufficiently serious breach of contractual obligations by one party to the contract qualifies as just cause for the other party to terminate the contract.
  • In principle, the breach is considered sufficiently serious when there are objective circumstances that would render it unreasonable to expect the employment relationship between the parties to continue, such as a serious breach of trust.
  • The termination of a contract should always be an action of last resort
Terminating a contract without just cause

The consequences of terminating an employment contract are that the party in breach of the contract will (in almost all cases) be required to pay compensation.

However, if a party terminates a contract without just cause, or seriously breaches its contractual obligations to such an extent that the counterparty (either the club or the player) has just cause to terminate the contract, the party at fault must normally pay compensation, and unless otherwise provided for in the contract, compensation for the breach shall be calculated with due consideration for the law of the country.

In this case, the party in breach would be expected to pay the remuneration and other benefits due to the player under the existing contract. This would be the residual value of the employment contract that was terminated early.

As mentioned previously, one would be looking at compensation of anything up to c. £15.5 million. However, this would be offset by the value of any new contract that Ronaldo may have secured by the time of FIFA’s decision.

Issue – Mitigation

The duty to mitigate is a common law principle under English law that requires an employee to minimise their losses, or the damage they have suffered, after being terminated. This means that an employee must make reasonable attempts to find new employment.

Whilst FIFA regulations do not place such an obligation on a party to mitigate losses, this is taken into account when calculating the compensation due to a player if their contract is terminated unilaterally and without just cause by the club (or with just cause by the player). FIFA’s regulations make a distinction between whether the player has signed a new contract or remains unemployed.

In this respect, Ronaldo would surely have secured employment with another club willing to pay the same (or more) salary by the time any FIFA proceedings would have ended. Therefore his losses would, in theory, be nil or very close to that.

Conclusion

As it turns out, the parties came to a mutual agreement that will remain confidential. 

However, it’s no coincidence that Ronaldo sought to end to his time at Man Utd just as the World Cup started and the January 2023 transfer window opens. In doing so, Ronaldo would (through his advisors) have considered the issues in bringing a claim (either by Man Utd or the player himself) before FIFA or an English court).

Man Utd will feel very aggrieved that its star player sought to criticise the club and its staff in such a manner. Similarly, the club will have considered its legal position – which many will argue was a good one – and Man Utd would have felt confident in bringing or defending any claim before FIFA or the English courts.

Nonetheless, there is a bigger picture to consider here to the extent that the Glazer family announced (on the same day that it announced that Ronaldo had left by mutual consent) that the club is up for sale. Man Utd’s share price rose almost 17% immediately after the announcement. 

The prospect of protracted (and very public) legal proceedings with the club’s star player would no doubt have weighed heavily on the minds of the owners when considering their legal position.

In the end, a draw was probably the best result here.    

Bryan Castillo withdrawn from Ecuador squad over fears of his nationality and eligibility

Posted on by fluroltd

The FIFA Men’s World Cup commenced on Sunday 20 November 2022 as the host nation, Qatar, faced Ecuador in the opening fixture.

However, the Ecuadorian Football Association (FEF) was involved in a legal dispute to ensure that its men’s A national team (Ecuador) is legitimately entitled to take part in this tournament.  The FEF has faced allegations from the Chilean Football Association (FFC) and the Peruvian Football Federation (FPF) that they fielded an ineligible player, Byron Castillo (Castiwllo), throughout their qualifying campaign in the lead-up to the World Cup finals.  

This article looks at the background to the dispute as well as FIFA’s response, and the final ruling from the Court of Arbitration for Sport settling this matter. It concludes by looking at where this leaves FIFA and football in general.

Background

Ecuador finished in fourth place (the final automatic qualification spot) in the South American World Cup Qualifying group with 26 points from 18 qualification matches – thus securing a place in the FIFA World Cup Finals for the fourth time in its history.

During these 18 matches, Ecuador fielded Castillo on 8 occasions – winning 15 points out of their 26 points accumulated. Castillo played on both occasions when Ecuador took 4 points from Chile during the qualifying campaign.

Castillo made his debut for Ecuador’s men’s A senior national team in September 2021, having previously played on 14 occasions for their under-17 national team and once for the under ’20s.

Nevertheless, the Chilean FA (FFC) claimed that Castillo was a Colombian national and had documentary evidence including falsification of a birth certificate and a passport by Castillo.

As a consequence, the FFC and the Peruvian FA (FPF) submitted a claim to FIFA’s Disciplinary Committee stating that the FEF had fielded an ineligible player – Castillo. Following this, an investigative procedure was commenced on 11 May 2022 by FIFA and one month later, FIFA announced:

“After analysing the submissions of all parties concerned and considering all elements brought before it, the FIFA Disciplinary Committee has decided to close the proceedings initiated against the Ecuadorian FA [Ecuador].”[1]

Nevertheless, this decision remained subject to appeal before the FIFA Appeal Committee and the FFC insisted that the FEF had knowingly misled officials by allowing Castillo to play for Ecuador throughout the qualifying campaign. 

To support this stance, the FFC submitted evidence stretching back to 2015 showing that Ecuadorian football club, Emelec, had returned Castillo to his parent club (Norte América) after one month (without playing any games for Emelec) when it had discovered that Castillo’s paperwork was non-compliant with their due diligence process.[2]

Such evidence included a reference to an internal FEF investigation into a series of fabricated documents that were discovered among the files submitted to the FEF in 2018[3]. Norte América was suspended by the FEF for breaching league regulations relating to the sponsoring of and benefitting from players’ falsified documents.

In fact, Castillo actually admitted to the FEF that he was born in Columbia in 1995. Such admission was a result of an investigation in 2018 by the FEF during an interview with the player.[4]

Allegations and FIFA’s Regulations

The FFC claimed that the FEF had aided in this fabrication or, at the very least, had knowledge that Castillo was using falsified identification documentation (i.e. a birth certificate) which would have been used to gain Ecuadorian citizenship. It followed then that, in the event that the original documentation were to be accessed, it would remove Castillo’s eligibility to represent Ecuador.

It is reported that Castillo’s original Colombian birth certificate has been validated by the Colombian birth registry and ministry for foreign relations, whereas the supposed Ecuadorian documentation has not be verified by the Ecuador’s civil register.[5]

The FFC and the FPF appealed to FIFA’s Disciplinary Committee (Disciplinary Committee) in early April 2022 with the hope that this would see Ecuador replaced by either Chile or Peru in the Qatar 2022 FIFA World Cup Finals. The Disciplinary Committee was asked to investigate:

“the possible falsification of documents granting Ecuadorian nationality to the player” as well as “…possible ineligibility of the said player to participate in eight qualifying matches of the national team of the Ecuadorian Football Association (the Ecuadorian FA) in the preliminary competition.”[6] 

The first issue (falsification of documents) falls under Article 21 of FIFA’s Disciplinary Code (Code), which states:

“1. Anyone who, in football-related activities, forges a document, falsifies an authentic document or uses a forged or falsified document will be sanctioned with a fine and a ban of at least six matches or for a specific period of no less than 12 months.

2. An association or a club may be held liable for an act of forgery or falsification by one of its officials and/or players.”

The second issue to (eligibility to represent Ecuador) falls under FIFA Rules Governing Eligibility to Play for Representative Teams.[7]  These regulations outline the specific eligibility conditions for international players, including the rules on being entitled to represent more than one association and the acquisition of a new nationality.[8]  If an association is found to have breached the eligibility regulations, Article 22 of the Code states:

If a player is fielded in a match despite being ineligible, the team to which the player belongs will be sanctioned by forfeiting the match and paying a minimum fine of CHF 6,000. The player may also be sanctioned.

Decisions of the FDC and Appeal Committee

The Disciplinary Committee dismissed all charges against the FEF and closed the proceeding in June 2022.

Nevertheless, on 1July 2022, the FFC officially appealed the decision to FIFA’s Appeals Committee (Appeal Committee) and urged FIFA to hear the appeal as quickly as possible so that any sanction could apply prior to the start of the World Cup in Qatar.

On 16September 2022, the Appeal Committee announced its decision, stating that the documents submitted by the FEF and Castillo were acceptable to the extent that Castillo holds:

“Permanent Ecuadorian nationality in accordance with article 5 paragraph 1 of the FIFA Regulations Governing the Application of the Statutes.”[9]

The extent of this provision essentially transfers the burden of deciding eligibility from FIFA to the application of local law within Member Associations. The Appeal Committee referred to Article 5 paragraph 1 of the eligibility regulations, which states:

“Any person holding the nationality of a country is eligible to play for the representative teams of the Association of his country. The Executive Committee shall decide on the conditions of eligibility for any Player who assumes a new nationality and for whom par. 3 of this article does not apply, or for any Player who would, in principle, be eligible to play for the teams of more than one Association due to his nationality”[10]

The Appeal Committee dismissed the appeal and confirmed the first-instance FDC decision stating that:  

“a person holding the nationality of a country, is eligible to play for the representative teams of the Association of his country”.

Nevertheless, Eduardo Carlezzo, who has represented the FFC throughout the proceedings, stated that:

“The Chilean FA confirms it will be appealing the decision to the Court of Arbitration for Sport as soon as it has received the full written reasons for the decision from FIFA.”[11]

The Court of Arbitration for Sport (CAS) accepted the appeal and heard the case over two days in early November 2022. A decision was published by CAS a few days later on 8 November 2022.[12]

Decision of CAS

On the 8 November 2022, and just 12 days before the start of the World Cup in Qatar, CAS released its decision following the joint appeal made by the FFC and the FPF.

CAS partially upheld the appeal, with their media release[13] stating the following:

On eligibility:-

The [Ecuadorian FA] did not violate Article 22 of the FIFA Disciplinary Code because the Player was eligible to participate in the preliminary competition to the FIFA World Cup Qatar 2022. Since the nationality of a player with a national association is determined by national laws (subject to time limits in case of a change of sporting nationality, which was not the case here), Byron Castillo was eligible to play for the [Ecuadorian FA] in the preliminary round of the FIFA World Cup Qatar 2022 considering that the Ecuadorian authorities acknowledged Byron Castillo as an Ecuadorian national.

On falsification of documents:-

The [Ecuadorian FA] violated Article 21 of the FIFA Disciplinary Code for the use of a document containing false information. For cases of falsification, FIFA rules do not refer to national law. Therefore, there is no need to defer to any determination made by the Ecuadorian judicial authorities on the falsification of the Player’s passport for FIFA to deem the document falsified under Article 21. In the present case, while the Player’s Ecuadorian passport was indeed authentic, some information provided therein was false. In particular, the Panel was comfortably satisfied that the Player’s date and place of birth were incorrect since the Player was actually born in Tumaco, Colombia, on 25 June 1995. As a result, the Panel deemed it necessary to hold the [Ecuadorian FA] liable for an act of falsification under Article 21, para. 2 of the FIFA Disciplinary Code, even if the [Ecuadorian FA] was not the author of the falsified document but only the user.

On sanction:-

The appropriate sanction for the aforementioned breach is a 3-point deduction in the next edition of the preliminary competition to the FIFA World Cup and a fine of CHF 100’000. The Panel considered that no violation of the rules on eligibility has occurred and that there were a series of extenuating circumstances, among them, that the [Ecuadorian FA] started a disciplinary proceeding against the Player which was halted by a decision of the Ecuadorian judiciary. The Panel determined that the 3-point deduction should not be imposed in the present preliminary competition to the FIFA World Cup, but rather in the next edition, considering that the Player was eligible to play in the preliminary competition to the FIFA World Cup Qatar 2022 and that such competition has not been affected by the aforementioned rule violation by the FEF.

Conclusion

The timing of the CAS’ decision has been a major factor in the sanction awarded to both Castillo and the FEF. The removal of Ecuador so close to the start of the 2022 World Cup finals would have caused huge upheaval and would also have drawn further criticism to an organisation (FIFA) that has been embroiled in controversy since it announced its intention to hold the 2022 tournament in Qatar. 

Nonetheless, recognition that documents were fabricated is undeniable. This fabrication was admitted by Castillo in 2019 and the FEF had full knowledge of this admission. Against this backdrop however, Castillo then played in Ecuador’s qualifying campaign and has played a significant role in their qualification for Qatar 2022.

Furthermore, despite the CAS decision giving the FEF a green light to play Castillo at the World Cup finals, he has not been selected in the 26-man squad to go to Qatar. The FEF’s reasons for Castillo’s 11th hour withdrawal was to avoid any “unfair sanctions” from his participation in the tournament.[14]

Castillo’s withdrawal from the Ecuador squad following on so closely from the CAS appeal decision (contradicting FIFA’s earlier determination) creates further speculation and confusion as to the integrity of FIFA and the FEF selection process in the qualifying campaign.

[1] ‘FIFA Disciplinary Committee Passes Decision on Eligibility of Byron David Castillo Segura’ (Fifa.com, 2022) accessed 4 October 2022, Available at: https://www.fifa.com/legal/media-releases/fifa-disciplinary-committee-passes-decision-on-eligibility-of-byron-david-castillo-segura

[2] FIFA statement on complaint made by Chilean Football Association (2022), Accessed: 10 November 2022, Available at: https://www.fifa.com/legal/media-releases/fifa-statement-on-complaint-made-by-chilean-football-association.

[3] Matt Hughes, Ecuador face being kicked out of the World Cup as Sportsmail reveal new evidence of fake passports, multiple identities and an apparent cover-up… with audio and documents confirming Byron Castillo WAS born in Colombia, Mailonline.co.uk, 12th September 2022, Accessed on 17th November 2022, Available at: https://www.dailymail.co.uk/sport/sportsnews/article-11203773/Ecuador-face-kicked-World-Cup-new-evidence-Byron-Castillo-Colombian.html

[4] Matt Cannon, The shocking audio in which Bryon Castillo reveals his true identity, marca.com, 13th September 2022, Accessed on: 17/11/2022, Available at: https://www.marca.com/en/world-cup/2022/09/13/6320c26846163f299e8b456c.html

[5] Givemesport, 2022 WORLD CUP: COULD ECUADOR BE KICKED OUT AND WHAT DOES IT MEAN FOR ENGLAND? Onefootball.com, 13th September 2022, Accessed on 17th November 2022, Available at: https://onefootball.com/en/news/2022-world-cup-could-ecuador-be-kicked-out-and-what-does-it-mean-for-england-35829885

 [7] Regulations Governing the Application –https://digitalhub.fifa.com/m/3815fa68bd9f4ad8/original/FIFA_Statutes_2022-EN.pdf

[8] Jonathan Collins, ‘A Guide To FIFA’s Eligibility Regulations For International Football’, lawinsport.com, 8 Feb 2021, last accessed 17 Nov 2022, https://www.lawinsport.com/topics/item/a-guide-to-fifa-s-eligibility-regulations-for-international-football

[9] ‘FIFA Appeal Committee Passes Decision on Eligibility of Player Byron David Castillo Segura’ (Fifa.com2022) https://www.fifa.com/legal/media-releases/fifa-appeal-committee-passes-decision-on-eligibility-of-player-byron-david accessed 4 October 2022

[10] FIFA STATUTES, Regulations Governing the Application of the Statutes https://digitalhub.fifa.com/m/5eb2b45e547ff39f/original/ndfxogwkoukoe4dm3uk0-pdf.pdf

[11] D’Urso J, ‘Chile Lose FIFA Appeal to Replace Ecuador at Qatar World Cup but Case Set to Continue’ (The Athletic16 September 2022) Accessed 4 October 2022, Available at: https://theathletic.com/3600519/2022/09/16/chile-ecuador-fifa-castillo-world-cup/?redirected=1

[12] CAS Media Release (tas-cas.org)

[13] CAS Media Release (tas-cas.org)

[14] AFP – Agence France Presse, Ecuador Leave Castillo Out Of World Cup Squad After ‘Unfair Sanctions, barrons.com, accessed on 17th November 2022, Available at: https://www.barrons.com/news/ecuador-leave-castillo-out-of-world-cup-squad-after-unfair-sanctions-01668534309

Christmas Kick-off: FIFA World Cup may bring tidings of joy for retailers and suppliers

Posted on by fluroltd

The FIFA World Cup is kicking off in Qatar on 20 November with the final being set for just a week before Christmas. The World Cup historically takes place during the summer, however, due to heat concerns in the host country, has been rescheduled for the cooler winter on this occasion.

Such unique timing, overlapping both Black Friday and Cyber Monday in the run-up to Christmas, may well bring tidings of joy for retail businesses in the U.K., with Qatar, calculated by Bloomberg to make $20 billion off the event, not being the only giftee this holiday season.  

It’s beginning to look a lot like Christmas  

Both Currys, British electrical retailer, and John Lewis, British department store chain, have revealed that they’re anticipating surges in TV sales in the coming months, as well as in other areas of technology such as projectors and sound systems, with the two biggest drivers of TV sales (Christmas and the World Cup) culminating in an England match on Black Friday. 

Big sales are also expected in groceries, with both celebrations of Christmas and football focusing largely on food and drink. Waitrose, British supermarket chain, confirms that their Christmas food lines are designed with both festive and football audiences in mind, and has brought festive food and drink sales forward (the chain revealed their Christmas range in August) to manage increased sales.  

Retailers and suppliers should be preparing for demand, therefore, ensuring supply contracts are negotiated, agreed and in place as soon as possible, as well as reviewing any already in place.   

Indemnity clauses  

A contentious part of most supply contract negotiations is the indemnity clause.  

An indemnity is a promise by one party (the indemnifying party) to reimburse the other party (the indemnified party) for its financial losses if a trigger event occurs. The promise is made when the parties agree that it would be unfair for the indemnified party to bear the resulting losses.  

Indemnity clauses should be tailored to the specific supply contract, and both parties should consider the following when drafting:  

  • Trigger  

The event that triggers payment must be clear. This is usually an event over which the paying party has control, so that it is fair for the liability to sit with them. The indemnifying party may want to negotiate excluding events outside of their control, or for which they are not to blame. For example, an act of God, or a loss caused by the other party’s negligence.   

  • Loss 

The loss needs to be quantifiable. A well-negotiated indemnity should balance both parties’ interests. For example, the indemnifying party may want the loss to be covered by their insurance, and the indemnified party may want to cover a specific loss in full.   Sometimes, the amount to be paid cannot be known until the indemnified party’s liability is assessed in court (e.g., where the indemnity uses the word ‘claims’, ‘damages’ or ‘judgment’. 

  • Causation  

Often, the indemnifying party’s duty is to pay for loss directly and solely caused by the trigger. A wider or narrower casual link may be negotiated, however. For example, “in connection with”, may be interpreted as the widest causal link between trigger and loss. The contract may also state that the loss has to be ‘foreseeable’.  

  • Mitigation 

If the indemnity relates to reimbursement of damages (e.g., for breach of contract) the protected party usually has a duty to mitigate their losses. However, indemnities can be drafted to avoid this duty to mitigate. 

  • Proof of loss 

The indemnified party must prove what payment is due under the contract. This normally involves providing the fact and amount of the loss specified in the indemnity. Express wording can be negotiated, however, to depart from this. For example, the parties may negotiate that the indemnified party’s statement of the amount due will bind both parties.   

  • Exclusion of other claims 

A party might indemnify another against loss arising from the indemnifying party’s breach of contract. The indemnifying party may also be liable to pay damages for that breach of contract. The contract should state whether the indemnified party may pursue only one claim, or both claims in the alternative, although there will be no double recovery.  

  • Capping liability 

The parties to a contract may agree a ‘limitation of liability’ clause which limits their maximum potential liability to the other party. The parties need to decide whether the indemnity is included under this cap or not. It is common for liability under indemnities to be uncapped. 

Because indemnities are very onerous clauses, they are ‘strictly interpreted’ by the courts. This means that there is less leeway if the indemnity is poorly worded, and it is important to get it right. 

Don’t get caught in the cold  

For help and advice on supply contracts, to include indemnity clauses, please contact our commercial team by calling on 020 3814 2020, emailing us at enquiries@blasermills.co.uk, or filling in our contact form. 

*Please note that this article does not constitute as legal advice and should not be taken as such* 

Blaser Mills Law shortlisted for CICM British Credit Awards 2023

Posted on by fluroltd

The British Credit Awards recognise the achievements of the most deserving individuals, teams and organisations in the international credit industry.

We are delighted to announce that we have been shortlisted for the CICM British Credit Awards 2023.

Our Commercial Recoveries, Litigation & Insolvency team has been named as finalists in the ‘Legal Provider of the Year Award’. A category aimed at legal providers that offer the highest quality service and appropriate solutions to its clients.

“We are very pleased to be shortlisted for the award and to be recognised within the industry reflects on the hard work and dedication from our team”.

Winners will be announced on the 2 February 2023 at the Royal Lancaster of London.

Estate planning

Posted on by fluroltd

We all want to make sure that our loved ones are taken care of when we are no longer around. Estate planning is making sure your wealth is passed on to the people you care about in the most efficient way possible.

Our Wills, Trusts and Probate team outlines all you need to know if you are considering making gifts in order to reduce your estate’s future Inheritance Tax (“IHT”) bill.

What gifts can I make?
A gift can be anything that has value such as money, shares, property or possessions.

Exempt beneficiaries: Gifts to exempt beneficiaries such as spouses, civil partners and charities will not be subject to IHT provided that certain conditions are met.
Annual “gift allowance”: You can give away up to £3,000 free of IHT per tax year within certain parameters.
Small gifts and wedding/civil partnership gifts: You can also make as many small gifts up to £250 free of IHT to anyone provided that you have not used another allowance already in the tax year on the same person. Wedding/civil partnership gifts can be made free of IHT depending on your relationship with the recipient.
Gifts out of surplus income: Gifts made from your surplus income are not subject to IHT provided that specific conditions are met.

7 year rule
Gifts that do not qualify for an exemption are subject to the 7 year rule. This means that no IHT is due on gifts if you continue to live for 7 years after making the gifts (although gifts to trusts may incur IHT). If you die within 7 years of making a gift and there is IHT to pay, the amount of IHT will depend on when the gift was made and is reduced on a sliding scale from 3 to 7 years.

Make sure to keep a record!
The person who will be responsible for dealing with your estate on death will need to work out what gifts were made so it is important to keep a note of any gifts made.

What about if I transfer my house to my children?
This is a complex area and can create adverse tax consequences if not dealt with correctly. You should take tax advice from a solicitor before doing this.

Wills and Trusts
It is important to review your Will to ensure that it reflects your wishes and has been drafted tax efficiently.

Trusts are a useful IHT planning tool and can be used to reduce future generations’ IHT bills. Trusts also have other key advantages such as protecting your assets from potential creditors and children’s future spouses, as well as preserving your assets for vulnerable beneficiaries.

Other tax implications
Expert advice from a solicitor should be taken on any other tax implications which might arise from making a gift, such as capital gains tax.

How Blaser Mills Law can help

Blaser Mills Law works with families over time as their close advisers, helping to ensure that their wealth is passed seamlessly from one generation to the next.

By showing our clients how assets can be structured to protect them for the future, we can maximise the financial benefits for our clients and help them to avoid unpleasant surprises and conflict that can arise when dealing with succession.

The team will ensure that you have the right structures in place, giving you peace of mind for the future.